Limited liability protection. Owners are not typically responsible for business debts and liabilities.

• Unlimited owners. C corps can have an unlimited number of shareholders.

  • Easy transfer of ownership. Ownership is easily transferable through the sale of stock.

    • Unlimited life. When a C corporation’s owner incurs a disabling illness or dies, the corporation does not cease to exist.

    • Owners take reasonable salaries. Salaries paid to owners of C Corporations, though taxable to them as salary, are deducted from C Corp profits for income tax purposes.

    • Owners are not automatically taxed on business earnings. In contrast to pass-through entities like LLCs, earnings of a C Corporation are not automatically taxed to the owners. They are taxed to owners if distributed as dividends. The C Corp pays tax on its income at C Corp tax rates.

    • Raise capital more easily. Additional capital can be raised by selling shares of stock.

    • Retained earnings inside the business. A C Corp could successfully retain earnings for reasonable business needs, if it complies with the accumulated earnings tax provisions, instead of distributing them to shareholders.

    • Credibility. C Corps may be perceived as a more professional/legitimate entity than a sole proprietorship or general partnership.

    • Lower audit risk. Generally C corporations are audited less frequently than sole proprietorship’s.

    • Tax deductible expenses. Business expenses may be tax-deductible.

    • Self-employment tax savings. A C corporation can offer self-employment tax savings, since owners who work for the business are classified as employees.